Valuation of Impaired Land: Greenfield Advisors Experience with Contaminated Sites

This paper reviews issues related to estimating property value effects from contaminated sites. Industrial economies release millions of chemicals into air, soil and water with adverse effects on human health, other species, future community economic development and private property values. Hundreds of thousands of parcels are damaged by contamination in the United States. Both private property rights and public goods are affected. Greenfield Advisors (formerly Mundy Associates), a Seattle based appraisal, specializes in assessing damages to real estate values resulting from contamination, often serving as expert witnesses in litigated cases. These valuations may require both cross sectional spatial analysis of contamination effects and time series analysis to assess how contamination and stigma play out over time. Cases begin with science respecting the environmental fate and remediation of particular contaminants and their human health consequences and effects on air, soils, water and living organisms. Class action treatment of cases where many properties are affected, environmental laws and regulations that determine “responsible parties”—in some cases with joint and several liability for any party in the chain of title—and foundation property rights principles (laws forbidding nuisance, trespass and unjust enrichment) play important roles in recovery of damages in such cases. Limited or incorrect information and beliefs may cause market prices to deviate from values that assume knowledgeable buyers and sellers.